How to Get Rid of Labor Unions

Since the late 1970s pundits have criticized organized labor for its inability to “think outside the box.” Specifically, they’ve scolded unions for not being visionary enough to abandon their traditional Us vs. Them mentality in favor of innovations infinitely more imaginative and, potentially, more economically rewarding. What they have in mind is something resembling profit-sharing.

Thank you, pundits. Thank you, academia, politicians, social commentators and amateur labor “experts” (who hold court at the local donut shop) for passing along this insight and advice. Your observations about becoming more team-oriented would have been immensely helpful….if you knew what the hell you were talking about.

In truth, unions have sought profit-sharing in one form or another for over a hundred years. There have been obstacles. For instance, on those occasions where the union and company were willing to try it, it was the membership itself who objected, fearing—rightly, in many cases—that they were being tricked into accepting some glamorized form of piecework. Conversely, when the membership and company wanted it, it was skittish union leadership who balked, largely for the same reasons.

And when the union leaders and the membership were willing to give it a try, it was management who chickened out. Finally, on those few occasions when the union, the rank-and-file, and the company management all agreed to take the plunge, the results were uniformly spectacular. They were dazzling. Which was why they failed.

Say what?

It’s true. Typically, profit-sharing ventures are discontinued for the simple reason that the workers (even mid-level management employees) are discovered to be making way more money than anyone had anticipated, and upper management can’t stomach that notion. They can’t accept it. If you don’t believe it, look it up. These programs regularly “fail” because they become too successful.

If companies wanted to do away with unions, they would come up with a profit-sharing template that was so fair, so clearly delineated and reasonable, it couldn’t help but appeal to both labor and management. Of course, they’d have to adhere to it (not counting minor tweaks) no matter how “successful” it became, because abandoning it would not only defeat its purpose but would expose management for the greedy bastards they were.

Consider the arithmetic. When the criteria are satisfied, the company is raking in the dough. Why? Because it was management who established the criteria in the first place. The benchmarks were their invention. Correspondingly, when the criteria are satisfied, the workers—who also agreed to them—are being commensurately compensated for their performance. And what workforce is going to object to that?

A typical schematic in an industrial setting has four categories: production, safety, quality and waste. The union and company jointly establish a benchmark for each category. When you surpass a benchmark, you make money; when you fall short, you don’t. Naturally, there is a base wage below which you can’t fall, so no one is going to lose anything. Again, these benchmarks aren’t going to be unreasonably lofty or unattainable because they were mutually agreed to by both parties.

Moreover, everyone in the facility—both hourly and salaried—gets an equal share. That means that every employee from the forklift driver to the cost analyst, from the machine operator to the janitor, from the shipping clerk to the mechanical engineer, is motivated to contribute. Everyone profits equally, which, to those who recall the early 1980s, is reminiscent of Japan, back in its glory days.

This format isn’t to be confused with piecework. Piecework was a primitive sweatshop concept begun in the 19th century, where textile employees worked themselves into a froth by getting paid by the “piece.” Union workers are smart enough to be skeptical of any schematic that would tie their wages to unrealistic and ever increasing production goals. They need to be reassured.

And the argument that carries the day is this one. You remind the workers of how much the facility has already improved in these four key categories—how much the tonnage has increased, the waste has diminished, the quality has improved, and the number of industrial accidents has declined—and how little they have benefited from those gains.

Indeed, you drive home the point that the only thing these workers have gotten in return for the dramatic improvements was their pitiful 3-percent raises (and they practically had to pull teeth to get those). Once these discrepancies are introduced, and the notion of “sharing in the wealth” is made clear, the membership usually goes for it.

Which is how companies could more or less eliminate labor unions. By inviting their employees to participate in the profits.

But companies don’t want to do it. They don’t want to part with their wealth—not in the form of taxes, not in the form of contractual wages and benefits, and not in the form of profit-sharing. In short, they want to keep it all. Which is what the pundits don’t seem to understand. And which is why the unions maintain those pesky Us vs. Them postures.